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  1. #1
    Junior Member
    Join Date
    Feb 2008
    Posts
    4

    Business analysis

    Hi

    I am a new member. Been lurking for a while and found really great info here.

    I am considering a business that is for sale that has the following numbers. I believe they are pretty good (if accurate,naturally), but I am no expert in this field, so I hope you can give me some input.

    Here it goes.

    Asking price: $374,000
    Revenue :$666,000
    Cost of goods: $206,000
    Gross Sales: $ 459,000
    Total Expenses:$324,000
    Cash Flow: $135,000

    Been in business for 4 years
    #Employees: 11PT /5FT
    size:1500 sqft

    Thanks in advance for any help you can give me. I just want to get a general idea if its a good deal or not.

    Angela

  2. #2
    Senior Member
    Join Date
    Jun 2006
    Posts
    162
    And revenue is greater than gross sales because...?

  3. #3
    Senior Member
    Join Date
    Jul 2004
    Location
    Hartford and New Haven, CT
    Posts
    991

    Re: Business analysis

    Quote Originally Posted by Angel11
    Hi

    I am a new member. Been lurking for a while and found really great info here.

    I am considering a business that is for sale that has the following numbers. I believe they are pretty good (if accurate,naturally), but I am no expert in this field, so I hope you can give me some input.

    Here it goes.

    Asking price: $374,000
    Revenue :$666,000
    Cost of goods: $206,000
    Gross Sales: $ 459,000 Shouldn't this be Gross Margin?
    Total Expenses:$324,000
    Cash Flow: $135,000

    Been in business for 4 years
    #Employees: 11PT /5FT
    size:1500 sqft

    Thanks in advance for any help you can give me. I just want to get a general idea if its a good deal or not.

    Angela
    If you can verify the number then I think it is worth further investigation. Ideally the numbers are all reflected in tax returns. You will need to have numbers for all 4 years. Pay attention to year over year revenues. If year 3 is greater than year 4, then you need to know why. Also pay attention to the change in COGS and in total expenses as a percentage of revenue.

    You also need a copy of their lease. Hopefully you can assume the lease, and the term is fair and still have enough years left on it so you don't get a big rent hike. You need to know why the current owner is selling. You also need to know local business climate and if a new competitor is setting up shop nearby.
    You want cream and sugar?
    NO COFFEE FOR YOU! NEXT!

  4. #4
    Junior Member
    Join Date
    Feb 2008
    Posts
    4
    yep sorry

    Asking price: $374,000
    Sales :$666,000
    Cost of goods: $206,000
    Gross Profit: $ 459,000
    Total Expenses:$324,000
    Cash Flow: $135,000

  5. #5
    Junior Member
    Join Date
    Feb 2008
    Posts
    4
    Thank you for the info.

  6. #6
    Member
    Join Date
    Mar 2007
    Location
    Cook Islands
    Posts
    31
    Just to spare you some grief in the long term, you say "your no expert".

    Before you get into this you need to become an expert, or you will not succeed. Sorry for the bluntness.

    Do as much homework as you possibly can. Understnad the business, stalk it, hang out outside and count customers, hang out inside and tally sales. Spend weeks doing this. Spend weeks understanding every item on their financial statements. Become an expert in their business, and as far as I'm concerned you should wind up knowing more about their business than they do. Then you will be ready, and you will be an expert.

    Good luck!
    Cheers,
    Frank

 

 

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